Last Minute…Year End Tax Savings
Benefits Your Business in 2013
No matter how the so-called “fiscal cliff” finally works out, building service contractors and others in the professional cleaning industry can take some important steps to reduce their 2012 tax burden and possibly plan ahead for 2013.* And with the end of the year fast approaching, this month’s TornadoWatch e-newsletter is arriving just in time.
The following are some tips that can potentially save you and your firm money:
• Many companies or individuals may be able to lower their tax bite by bringing income, bonuses, dividends, and capital gains forward into 2012, if possible. As an example, many firms are declaring special dividends, paying those in December 2012, to lower shareholders expected tax burden as a result of expected higher tax rates in 2013.
• Making Capital Expenditure purchases in 2012 and placing them in service by December 31. 2012, may allow you to take advantage of special depreciation and write-offs, under Section 179 rules. Current Section 179 rules were part of the Economic Stimulus Plan and are set to expire on December 31, 2012. If you are purchasing or leasing new business equipment, Uncle Sam will essentially help pay for those purchases through special tax treatment. It isn’t often that Uncle Sam gives us a gift, and this one is worth taking advantage of.
• Save money on your taxes and provide for your retirement at the same time by maximizing contributions to your 401K or SEP IRA Retirement Account. Even self-employed business owners, regardless of whether or not they are the only employee, can usually establish a SEP IRA, enjoying significant tax savings in the process.
• Hire a vet: If you’re thinking about adding staff, consider hiring a qualified military veteran before year’s end. The Work Opportunity Tax Credit allows businesses to take a credit up to $9,600 for hiring a vet, depending on a variety of factors.
“And consider hiring a tax professional to handle your business taxes as well as explore the above opportunities,” says Michael Schaffer, president of Tornado Industries. “A tax professional can make suggestions and offer advice that can help your businesses plan tax strategies for years to come.”
*The term fiscal cliff describes the financial crisis that the U.S. government will face at the end of 2012, when specific tax breaks will expire and certain expenditures will be automatically cut or reduced, if another agreement is not reached.